n this article, What is Kava Coin? We will answer the question and explain the details of the Kava Coin project.
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In this article, What is Kava Coin? We will answer the question and explain the details of the Kava Coin project.
What is Kava Coin?
Kava aims to be the default DeFi platform by providing stablecoins and decentralized loans against all major crypto assets.
Kava uses Cosmos and works with the Tendermint-based Proof-of-Stake (PoS) consensus mechanism. Kava is essentially based on a system similar to MakerDAO and uses CDPs but leverages Cosmos zones to add cryptocurrencies that run on independent networks (e.g. XRP, Bitcoin).
Kava relies on two main tokens: KAVA and USDX (Kava’s stablecoin). Alongside the Stabilcoin USDX, Kava has KAVA, a governance token that is more involved in the binding curves of network validators. Kava is also used when acting as a lender as a last resort.
The platform has three main use cases:
Users can withdraw USDX, Kava’s stablecoin, by locking collateral in a smart contract.
They can deposit USDX for a return.
Users can take a number of secured loans to create synthetic leverage for any supported crypto asset. For example, it is possible to lock XRP and lock USDX to buy XRP, thus creating a leveraged long position in XRP.
What is Kava (KAVA)?
Kava is a cross-chain DeFi platform that offers secured loans and fixed coins to users of major crypto assets, including BTC, XRP, BNB, ATOM and others.
Users can collateralize their crypto assets against USDX, Kava’s stablecoin.
KAVA is the management and staking entity responsible for securing the network and voting on critical parameters. Kava aims to be a “de facto DeFi platform, compatible with major crypto assets” by providing a decentralized lending platform and fixed coins. In particular, Kava provides:
Decentralized loans and leverage: Kava provides users of major cryptocurrencies with open access to loans, leverage and fixed currencies for hedging.
Stablecoin hedging with interest: Kava’s USDX stablecoin can be tied in a way that yields returns to USDX holders.
Extensible synthetics and derivatives: Kava can grow to support a wide range of new crypto assets and offer new synthetics and derivatives.
The Kava platform has two types of tokens: KAVA token and USDX stablecoin. The KAVA token is the native token of the KAVA blockchain: it is an integral part of the security, management and mechanical functions of the platform. There are three main use cases for KAVA token:
Security: Top 100 nodes verify blocks based on their weighted bond share in KAVA tokens. Economic incentives for validators come in the form of earning KAVA as a block reward, in transaction fees, and facing losing KAVA. This is based on stringent cutting conditions such as the inability to achieve high uptime and double signing processes.
Management: KAVA is used for proposals and voting on critical parameters of the collateralized debt position (CDP) system. This includes but is not limited to the system’s global debt limit, supported collateral types, debt limits, collateral rate, fees, and savings rate for USDX.
Last lender: KAVA functions as a reserve currency in cases where the system is insufficiently collateralized. In such cases, the new KAVA is printed and used to buy USDX from the market until USDX is securely over-collateralized.
Similarly, there are three main use cases for USDX stablecoin:
Margin trading / leverage: Users who buy USDX from the platform primarily use it to purchase additional crypto assets and effectively increase their exposure.
Interest hedging: Traders can keep USDX as a stable asset while trying to limit exposure to volatile crypto assets. Owners can bind their tokens and accumulate interest equal to the current USDX savings rate.
Stablecoin payments: The fast block times and fast accuracy of the Kava blockchain allow USDX to be used for common payment use cases.
You can check the Kava Coin price from this link.
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